Microeconomic: Theory and Applications, 11th Edition

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Brown and Zupan's revision plan for Microeconomics: Theory & Application, 11th Edition, includes general updates and revisions throughout including new information on behavioral economics, game theory, price theory, and problems for every chapter. The text features a new "solved" problems section in applicable chapters, and a new feature for WRK. In addition, Browning and Zupan use text and graphs, nearly without any math at all to teach microeconomic concepts. This edition is also enhanced with large clear graphs with simple exposition explaining the dynamic make learning very simple; new real-world applications which are up to date and help readers engage with the book; and international applications acknowledge that everything happens today in a global environment.

Preface v

Acknowledgments x

Chapter 1: An Introduction to Microeconomics 1

1.1 The Scope of Microeconomic Theory 2

1.2 The Nature and Role of Theory 2

1.3 Positive versus Normative Analysis 4

1.4 Market Analysis and Real versus Nominal Prices 5

1.5 Basic Assumptions about Market Participants 6

1.6 Opportunity Cost 6

1.7 Production Possibility Frontier 10

Chapter 2: Supply and Demand 15

2.1 Demand and Supply Curves 16

2.2 Determination of Equilibrium Price and Quantity 23

2.3 Adjustment to Changes in Demand or Supply 25

2.4 Government Intervention in Markets: Price Controls 28

2.5 Elasticities 33

2.6 The Mathematics Associated with Elasticities 42

Chapter 3: The Theory of Consumer Choice 48

3.1 Consumer Preferences 50

3.2 The Budget Constraint 59

3.3 The Consumer’s Choice 63

3.4 Changes in Income and Consumption Choices 68

3.5 Are People Selfish? 74

3.6 The Utility Approach to Consumer Choice 77

Chapter 4: Individual and Market Demand 85

4.1 Price Changes and Consumption Choices 86

4.2 Income and Substitution Effects of a Price Change 91

4.3 Income and Substitution Effects: Inferior Goods 96

4.4 From Individual to Market Demand 99

4.5 Consumer Surplus 101

4.6 Price Elasticity and the Price–Consumption Curve 107

4.7 Network Effects 109

4.8 The Basics of Demand Estimation 113

4.9 Deriving the Consumer’s Demand Curve Mathematically 117

Chapter 5: Using Consumer Choice Theory 122

5.1 Excise Subsidies, Health Care, and Consumer Welfare 123

5.2 Subsidizing Health Insurance: ObamaCare 128

5.3 Public Schools and the Voucher Proposal 133

5.4 Paying for Garbage 137

5.5 The Consumer’s Choice to Save or Borrow 141

5.6 Investor Choice 147

Chapter 6: Exchange, Efficiency, and Prices 158

6.1 Two-Person Exchange 159

6.2 Efficiency in the Distribution of Goods 165

6.3 Competitive Equilibrium and Efficient Distribution 169

6.4 Price and Nonprice Rationing and Efficiency 173

*6.5 Some of the Mathematics behind Efficiency in Exchange 176

Chapter 7: Production 180

7.1 Relating Output to Inputs 181

7.2 Production When Only One Input Is Variable: The Short Run 182

7.3 Production When All Inputs Are Variable: The Long Run 189

7.4 Returns to Scale 194

7.5 Functional Forms and Empirical Estimation of Production Functions 197